Big news: CNG prices can be expensive by Rs 12, know why

According to an estimate, after the record increase in natural gas prices, CNG may become costlier by Rs 8-12 per kg, while the price of cooking gas can be increased by Rs 6 per unit.

CNG may become costlier by Rs 8-12 per kg after record increase in natural gas prices. kitchen gas (PNG) can be increased by Rs 6 per unit. Analysts have predicted this. The rates of natural gas have increased from October 1, due to which CAG And an increase in the rate of PNG can be seen. The price of gas has increased by up to 40 percent, after which the price of CNG and PNG is bound to increase. There is a big crisis in the energy sector all over the world, especially in Europe. After the Russo-Ukraine war, the supply of gases is being seen very adversely and India is also not untouched by it.

There is another reason behind the inflation of gases in India. The government last week raised the payment rate for gas extracted from old gas fields to $8.57 per unit from the current $6.1 per million British thermal unit (per unit). At the same time, the price of gas extracted from difficult areas has been increased from $ 9.92 to $ 12.6 per unit. On the basis of this rate, about two-thirds of the gas produced in the country is sold.

why are the prices rising

Natural gas is a major raw material for making fertilizers as well as for generating electricity. It is also converted into CNG and piped (PNG) is also used for cooking food in the kitchen. Kotak Institutional Equities said the prices of gas produced from old gas fields have increased nearly five times in just one year. Its price had risen from $ 1.79 per mmBtu in September 2021 to $ 8.57 in September 2021.

For every dollar increase in mmBtu gas price, city gas distribution (CGD) entities have to increase the price of CNG by Rs 4.7 to 4.9 per kg. According to ICICI Securities, CNG and PNG prices would need to be increased by Rs 6.2 per standard cubic meter and Rs 9 to 12.5 per kg to completely offset the impact of higher raw material cost.

read this also

How much will the price increase in Delhi

Jeffries said Indraprastha Gas Ltd, which retails CNG and PNG in the national capital, will need to increase the price of CNG by Rs 8 per kg, while Mahanagar Gas Ltd, a retailer in Mumbai, will have to hike prices by Rs 9. Kotak said there is a serious need to revisit the domestic gas price formula and introduce floor/ceiling prices due to several reasons.(input/language)